Functions of a Business PDF

Study Master This presentation was originally supplied by the publishers of your textbook and has been edited by WGHS.  Functions of a business What are we going to learn? The eight main functions Topic 14 Characteristics of the...

Study Master This presentation was originally supplied by the publishers of your textbook and has been edited by WGHS.  Functions of a business What are we going to learn? The eight main functions Topic 14 Characteristics of the business functions  Try to name the eight functions of a business (one name for each of the eight blocks) There are eight business functions, each usually performed by a different department in the business: 1. Administration function 2. Purchasing function 3. Marketing function 4. Finance function 5. Public relations function 6. Human resources function 7. Production function 8. General management function  1. The administration function Performing daily tasks (answering phone, emails, etc.) Handling, recording and filing information Paying accounts Planning Scheduling Record-keeping Organising Being thorough and meticulous, paying attention to detail Being good at setting up efficient systems Being able to liaise with people from all of the other departments in the business. Managing the administration budget  Administration function: Risks If the administration system does not function well, the business will not perform well, e.g. a hotel with a disorganised booking system. Laws regarding information – must be aware of and adhere to these laws. Fire/theft could mean a loss of data so back-ups of data are essential, either physically in a safe or in the cloud. Hacking can compromise electronic data so the necessary security levels should be in place.  2. The purchasing function The purchasing function is responsible for: Acquiring raw materials at the best possible price. Making sure that the raw materials are ordered on time so that production is not held up. Making sure that purchases stay within budget. Keeping accurate records of purchases. Making sure that there is always enough stock of raw materials. Purchasing function: Risks Changes in exchange rates can increase costs. Delays in the delivery of raw materials can hold up production. If suppliers sell poor quality materials, the quality of the final product will be below standard.  3. The marketing function It is the marketing function’s responsibility to: Determine what goods the business should produce. Determine how the business and its goods should be branded to have the biggest impact on potential customers. Determine the best distribution channels. Advertise and promote the goods. Provide publicity for the business and its goods. Make decisions about how to standardise the production processes. Determine the best pricing for the business’s goods. Find a target market for the goods. Manage the marketing budget.  Marketing function: Risks Businesses need to spend the right amount on marketing: Spending too little on marketing could mean that potential customers don’t know about the product. Spending too much on marketing might not lead to increased sales and would therefore have a negative effect on profits.  4. The finance function It is responsible for: Managing the cash flow of the business. Managing the budgets of the business. Keeping records of income and expenses. Paying the business’s accounts. Paying the business’s taxes (company tax & VAT). Managing the business’s investments, loans and shares. Raising the capital that the business needs to operate. Protecting the business against financial mismanagement. Setting policies about ethical use of business funds. Keeping the business’s assets secure. Ensuring that the business is protected against risky investments. Ensuring that the business makes safe and sensible financial decisions.  Finance function: Risks Criminal acts such as fraud and theft pose a huge risk to the finances of a business. Bad debts (when it is decided that customers will not be able to pay their accounts and the amounts need to be written off) are an expense. Changes to interest rates or exchange rates affect the finances of a business.  5. The public relations function The public relations function does the following: Finds out about how the public sees the business. Gives advice to senior management about how the business can improve public opinion. Communicates with the public. Runs promotional events. Social responsibility: when a business acts in the best interests of the environment and society as a whole, e.g. uplifting communities with bursaries for further study. Community development can build the public image of a business.  Public relations function: Risks Negative publicity might mean that the public stop supporting a business. This could include: A social media post by a customer who had a bad experience. A controversy or scandal involving a celebrity associated with the business. Environmental issues such as a business using non-recyclable packaging or dumping waste in a river.  6. The human resources function Recruiting or hiring staff Defining job descriptions Administering staff leave Retaining staff Keeping staff happy Training staff Dismissing and retrenching staff Ensuring that the workplace is healthy and safe Maintaining good labour relations Keeping the business compliant with laws, eg. Employment Equity Act, Labour Relations Act, Basic Conditions of Employment Act, Skills Development Act  Recruiting or hiring staff (part of the HR function) Advertise the position (give correct information including the minimum qualification required and the job description) Compile a ‘short list’ (list of applicants to interview) from all of the applications Run the interviews fairly (all interviewees are asked the same questions by the same panel members in the same order) A further round of interviews may be required A recruitment agency could be engaged to run this process  Human resources function: Risks A dissatisfied workforce puts a business at risk of industrial action such as strikes. Labour laws (such as the BCEA and the LRA) are designed to prevent exploitation of workers but they often favour the employee rather than the employer. Hiring the incorrect person could have long-term consequences as it is difficult to dismiss them once appointed.  7. The production function Manages all aspects of production process, including: Getting the resources for the production process. Choosing the best production method. Managing efficiency and quality. Scheduling the production process. Managing the production budget. Controlling production costs. Keeping up to date with latest technology. Improving the production process.  Production function: Risks Running out of raw materials can cause a delay in production. Electricity or water shortages or striking workers can affect production. Producing goods of poor quality can damage the reputation of the business or brand – quality control is important.  8. The general management function Does the following: Plans and strategises at a high level. Keeps the business on track for achieving its objectives. Oversees all the other functions broadly. Manages all of the other managers. Plans, organises, leads and controls resources. Ensures that the functions work together. Reminder: in Grade 8 you learned that… There are three levels of management: Top: including Chief Executive Officer (CEO), Chief Financial Officer (CFO), Managing Director, General Manager Middle: usually manage a branch or a department Lower: Supervisors, Foremen, Team leaders Managers at all levels do the following: Plan: formulate goals/targets Organise: allocate tasks and resources Lead: motivate and guide people Control: measure results against goals and take action where necessary  General management function: Risks Risk management is a very important part of general management. Because this function manages all of the other functions, it can observe and analyse how the other functions are performing and whether they are putting the business at risk. General management checks the progress of the business and each of its functions against the vision and goals of the business.